Korea-Chile FTA boosts agricultural imports
Korea Herald, 2006.03.29
Korea-Chile FTA boosts agricultural imports
Experts say deal has less adverse impact on agricultural sector than anticipated
Imports of Chilean agricultural products to Korea have increased sharply since a bilateral free trade agreement took effect in April 2004, and with modest impact on the agricultural sector.
Korea shipped in $125 million worth of agricultural goods from Chile in 2005, a 139 percent surge compared to $52 million recorded in 2003 before the FTA, the Ministry of Agriculture and Forestry said today.
It highlighted the significant increase in Chilean goods, considering that imports of agricultural and livestock goods on the whole rose 17.2 percent during the same period.
The South American country is Korea’s first free trade partner and the two countries will mark their second anniversary on April 1. Under the agreement, Seoul has lifted tariffs on about 96 percent of imports from Chile. The South American country has been required to remove tariffs on over 96 percent of imports from Korea over the ensuing 10 years.
The Agriculture Ministry attributed the rising import trend to the gradual elimination of tariffs over a long-term period.
"Goods from Chile will only continue to increase," the ministry said in a statement.
Compared to 2003, shipments of edibles that have grown in popularity are kiwi, which jumped by 351.3 percent, tomatoes (203.1 percent), pork (166.7 percent), and even wine (297.4 percent).
Many experts say the surge has had less of an adverse initial impact on the sensitive agricultural sector than what had been anticipated by farmers who feared their livelihoods would be threatened with greater market access.
But some experts like Choi Sei-kyun, a research director at the Korea Rural Economic Institute, underlined in his latest research report that it is still too early to gauge the effect of the bilateral free trade deal on domestic farmers, despite the relatively rapid rise in Chilean agricultural imports.
Choi emphasized that it is difficult to attribute the increase in imports to only the FTA, since there are other factors involved, such as changes in export prices of Chilean goods and currency exchange rates.
He pointed out that market share of Chilean pork imports dropped to 13 percent last year from 15.5 percent in 2004.
Choi’s study showed that last year, imports of agricultural products on the whole dropped 0.6 percent, while Chilean goods increased 67 percent. Shipments of livestock from the South American country rose 47.1 percent, compared with the 34.5 percent increase in total livestock imports.
"Assessment of the effect of the Korea-Chile FTA needs to be handled from a long-term view, especially if we are to make comparisons with the pre- and post-FTA by taking account of the anticipated negative impact, as well as the gradual drop in tariffs over a long-term period," Choi said in his report.
Korean exports and investments have also benefited from the bilateral trade pact.
Shipments to Chile had expanded 9.6 percent a year before the FTA took effect but jumped 58.2 percent a year after implementation, and 52.6 percent the second year, said Jung Jae-hwa, head of the Korea International Trade Association’s FTA research team.
He spoke at a seminar hosted by the Korea Institute for International Economic Policy and KITA today.
Korean products in the Chilean market accounted for about 3.6 percent as of last year, up 0.6 percentage point from 2003, Jung said.
Lee Kun-kyu, a KIEP trade expert, said the FTA has also revved up Korean investments in Chile. Investments that totaled $2.67 million in 2000 have more than doubled to average $5.87 million from 2003 to 2005. Lee said investments once limited to developing copper ores have expanded into areas like electronics and retail.
Korea, a latecomer in forging FTAs, is now aggressively seeking trade pacts with many economies, in aims to boost competitiveness of domestic goods in the global market and open up the market.
By Yoo Soh-jung
(sohjung@heraldm.com)
